Broadcom Corp., the biggest supplier of chips for television set-top boxes, said phone companies around the world will soon offer free or subsidized tablet-style computers to retain customers.
Broadcom’s Persona Tablet design and chips are the basis for the Hikari iFrame, a tablet distributed by Japan’s Nippon Telegraph & Telephone Corp., Broadcom Vice President Martyn Humphries said in an interview. NTT’s counterparts in Europe will follow later this year and in the U.S. next year, he said.
Apple Inc.’s iPad, which researchers say contains some Broadcom chips, has fired up interest in tablet computers among consumers. Phone and Internet service providers may try to tap into that demand with free or cheap tablets that improve access to entertainment and communications offerings as a way of stopping their customers from looking elsewhere.
“Apple’s created the big buzz today, but some of the carrier developments have also been going on in parallel,” Humphries said. “The biggest value to the carrier is he starts to maintain more customer loyalty.”
Wireless carriers typically offer free or subsidized mobile phones to customers who sign contracts to pay monthly service fees over a long-term period, often two years.
Humphries, speaking at a product demonstration in San Francisco, declined to name potential U.S. and European phone companies that might offer free tablets with Broadcom chips, citing confidentiality agreements.
Controlling TVs
The tablets will be able to play music and video and send content wirelessly to other devices in the home, controlling and feeding multiple televisions. Service providers will be able to boost revenue by offering advertising, home automation and home- security services through such devices, Humphries said.
Broadcom fell 23 cents, or 0.7 percent, to $34.40 at 4 p.m. New York time in Nasdaq Stock Market trading. The shares have gained 9.3 percent this year.
Apple uses Broadcom chips in the iPhone and new iPad tablet, according to researcher ISuppli Corp. and technology analysis firm Chipworks Inc. Irvine, California-based Broadcom, whose revenue fell 3.6 percent to $4.49 billion last year, has been trying to broaden the market for its products by promoting devices to carriers that use either Google’s Android operating system or Linux variants.
Broadcom is one of several chip companies hoping to capitalize on tablet computers. Market analyst IMS Research predicts that, by 2012, more than half of all tablets sold each year will be distributed by mobile and fixed-line broadband providers.
Freescale, Intel
Privately held chipmaker Freescale Semiconductor Inc., whose applications processor is used in Amazon.com Inc.’s Kindle electronic book reader, showed its own tablet prototype at the Consumer Electronics Show in January. Intel Corp., the world’s largest semiconductor company, also has said its Atom chip currently used in most netbooks sold today would work well with tablet-style devices.
Apple may have a year’s lead in the U.S. before any major carriers begin offering subsidized or free tablets as part of service packages. Apple is selling three models of the iPad that work in the U.S. via Wi-Fi. Three other versions that work with both Wi-Fi and 3G mobile-phone networks will debut later this month.
--Editors: Stephen West, Tom Giles.
To contact the reporter on this story: Cliff Edwards in San Francisco at cedwards28@bloomberg.net; Ian King in San Francisco at ianking@bloomberg.net.
To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net